Many sellers and providers of complex systems, such as data processing and communication systems, for example, purchase numerous products from manufacturers and suppliers for incorporation into the systems. The products purchased from the manufacturers and suppliers themselves frequently incorporate smaller components, and the cost of a product to the supplier naturally depends in significant part on the cumulative cost of the components making up the product. Price negotiations between a systems seller or other party that purchases components to be resold or incorporated into its own products, referred to hereinafter as a purchaser, and a manufacturer or supplier of a product used by the systems seller, referred to hereinafter as a vendor, are often heavily influenced by the cost of the components. Frequently, the price of a product negotiated between a purchaser and a vendor is based in large part on the total component cost to the vendor, supplemented by markups based on component cost, profit, and value added activities performed by the vendor. A vendor's price quote for a product in such cases typically includes a detailed breakdown of component prices. Markups are frequently understood to be a percentage of the component costs, with the percentage amount of the markup having been previously negotiated between the purchaser and the vendor. Because of the importance of component costs in determining pricing, purchasers have a strong interest in analyzing component costs to determine whether the price quotations by the vendor are based on acceptable prices for components.
Moreover, purchasers often have ongoing relationships with a limited number of large vendors who in turn purchase large numbers of components from their own suppliers. One particularly important category of vendor used by sellers of complex electronic systems is an electronic manufacturing services (EMS) provider. A purchaser often has an ongoing relationship with an EMS provider and receives periodic price quotations for all products and components offered for sale by the provider to the purchaser. The purchaser may conduct price negotiations with the provider to establish prices for a particular period. The purchaser may also receive quotes for individual products from an EMS provider, or from other vendors.
Considerable information is available relating to factors that influence acceptable prices for components. This information includes information relating to inventory levels, supply and demand, actual prices negotiated by the purchaser, and specific price targets established for the components.
In a large enterprise, particularly an enterprise purchasing products that may comprise very large numbers of components, information relating to various factors that influence component prices is typically distributed widely throughout the organization. Analysis of these factors and their use in determining appropriate component pricing as it relates to any particular product is therefore difficult.